Central banks are willing to learn more about digital currencies. On October 9, the Bank for International Settlements (BIS) in cooperation with a group of seven central banks. This first joint report is about central bank digital currencies (CBDC). It is worth noting that, alongside the report, the Bank of Japan released a document regarding its own specific approach to CBDCs. As a reminder, the Bank of Japan is a member of the group as well.
Based on the report from this report, the Bank of Japan will begin the first of several testing phases for its CBDC in 2021. Interestingly, this will include the development of a test environment for currency and experiments on its basement functions as a payment instrument.
According to the report, the digital currency must able to cope with problems caused by various situations.
Unfortunately, Japan is prone to a wide range of natural disasters including earthquakes, floods, etc. Thus, it is not surprising that the Bank of Japan needs a digital currency, that will be able to withstand various problems. Interestingly, offline use in times of system and network failures and electrical outages is also important for the country.
Digital currencies and natural disasters
As stated above, the report contains interesting details. However, it gives no details about how the Bank of Japan plans to use digital currency in such cases. Hopefully, there are solutions that address potential electrical or network failures for Bitcoin and other blockchain-based cryptocurrencies.
For example, the development of mesh networks based around long-wave radio transmitters. Also, Blockstream’s satellite network which broadcasts Bitcoin transactions via space.
Let have a look at the Bank for International Settlements (BIS). Interestingly, BIS includes central banks from Canada, Japan, the United Kingdom, Sweden, Switzerland, and the European Central Bank. Moreover, the United States Federal Reserve also became a member of the Bank for International Settlements.